Chinese investors fuel retail spending

After five years of chronic frugality, Australians are finally starting to loosen their purse strings and retailers may have Chinese property investors to thank for it.

Australian retail spending has lifted close to five per cent in the past six months, which is more than double the growth recorded for the whole of 2012.

A key reason for the improvement, according to real estate business Colliers International, is Chinese investment in the property market.

Chinese buyers purchased around $5.9 billion worth of property in the year to June 2013 according to Colliers, and are now buying up almost one fifth of new housing in Sydney.

Coupled with low interest rates, that added demand helped drive Australian capital city home prices up 9.5 per cent in 2013.

That's bad news for first home buyers but good news for retailers, according to Colliers International head of retail Michael Bale.

"Increasing residential property values impact on how wealthy consumers feel and in turn their propensity to spend," he said.

So homeowners are feeling richer as the value of their property rises and are spending more at the shops as a result.

Mr Bale said foreign investors are also having a more direct impact on retailers by taking advantage of the recent slide in the Australian dollar to buy up luxury goods while Down Under.

The slide in the dollar has also pushed up the relative cost of travelling overseas and made goods purchased through international websites more expensive, which means Australians are spending more of their money with local retailers.

The dollar is currently trading around 90 US cents, which is down from around $1.04 a year ago.

"This level is supportive of not only attracting more overseas visitors to Australia, but also acts as a disincentive for Australians to take offshore holidays, particularly to the US," Colliers director of research Nora Farren said.